Is Your Spouse Subject to the ACA Penalty? ACA Coverage for Green Card Holders Explained

Introduction

The Affordable Care Act (ACA) requires most individuals to have minimum essential health insurance coverage or pay a penalty. This requirement also applies to lawful permanent residents, such as green card holders. In this blog, we will explore the specific rules and exemptions related to ACA health insurance coverage for green card holders and how it impacts their tax obligations.

ACA Coverage and Green Card Holders

Permanent residents who have a green card for at least one day during the year are subject to the ACA’s individual mandate and are expected to have health insurance coverage for the entire year. This means that they must maintain coverage through a qualified health plan, such as an employer-sponsored plan, Medicaid, or a plan purchased from the Health Insurance Marketplace.

However, there are certain exemptions that may apply to green card holders who do not have health insurance coverage. These exemptions include:

Non-Resident Alien Exemption: Green card holders who were considered non-resident aliens for the entire year, meaning they did not establish a permanent residence in the United States, may be exempt from the individual mandate.
Short-Term Exemption: Green card holders who had health insurance coverage for less than three months during the year may qualify for a short-term exemption.
Affordability Exemption: Green card holders who cannot afford the least expensive health insurance plan available to them may qualify for an affordability exemption.

Penalties for Lack of Coverage

Green card holders who do not have qualifying health insurance coverage for the entire year may be subject to the ACA penalty, which is calculated based on their household income and filing status. The penalty is applied when filing their tax return and is paid along with their taxes.

Tax Implications for Foreign Accounts

In addition to the ACA coverage requirements, green card holders must also report any foreign assets, including bank accounts, on their tax return. Failure to disclose foreign accounts with a balance of over $10,000 can result in penalties. Interest earned on foreign accounts may also be subject to taxation.

Conclusion

Understanding the ACA coverage requirements and exemptions for green card holders is essential to avoid penalties and ensure compliance with the law. It is recommended to consult with a qualified tax professional to determine the specific requirements and exemptions that apply to your situation. By maintaining appropriate health insurance coverage and reporting your foreign assets accurately, you can fulfill your obligations under the ACA and avoid unnecessary penalties.